Citi, a renowned banking giant, has partnered with SIX Digital Exchange (SDX), the digital assets-focused branch of Switzerland’s main stock exchange. Together, they are working on tokenizing non-publicly traded shares to simplify the $75 billion market cluttered with PDFs and paper documents.

The collaboration involves Citi serving as a custodian and issuer agent for tokenized versions of late stage, pre-IPO equities on SDX’s regulated blockchain-based Central Securities Depository (CSD) platform. The platform is set to launch in the third quarter and will be initially focused on Switzerland, Singapore, and other parts of Asia, excluding U.S. investors.

Private shares in high-growth, venture-backed companies represent a significant subset of the alternative asset class, valued in the trillions of dollars. With firms staying private for longer periods, secondary markets play a crucial role in providing liquidity for investors and employees. However, the current manual and cumbersome transaction processes and lack of scalable infrastructure pose challenges.

Nisha Surendran, digital asset emerging solutions lead at Citi Ventures, highlighted the absence of scalable infrastructure in private markets, leading to a reliance on PDFs and paper documents for transactions. Settlement of transactions can take five to eight weeks, and the lack of integration with investors’ wealth statements further complicates the process.

SDX CEO David Newns emphasized Switzerland’s mature digital-securities regulatory environment and the utilization of R3’s Corda distributed ledger technology for building the blockchain-based securities depository. This technology enables seamless access to investment instruments through investors’ broker and custodian.

Citi’s involvement as a custodian on SDX reflects its strategy to offer clients access to new digital asset markets, including private market assets. Collaborations with digital asset banking group Sygnum and SBI Digital Markets will facilitate access to the pre-IPO equities on the SDX platform.

This partnership marks a significant step towards streamlining the private market asset tokenization process, providing investors with greater accessibility and efficiency in their transactions.